Understanding the Importance of Brands

The Importance of Brands

Brands are important to brand owners at two quite different levels. Firstly, they serve as a focus for consumer loyalties and therefore develop as assets which ensure future demand and hence future cash flows. They thus introduce stability into businesses, help guard against competitive encroachment and allow investment and planning to take place with increased confidence.

The brand also serves to “capture” the promotional investment which has been placed behind a product (individually or the whole corporate product)

What Is A Product?

The Product is the central element of an organisation’s Value Offer to its target segment.  The term “product” is a broad one and refers to both goods and services.  In fact a product is anything offered and acquired considered having value by:

1. A Buyer

2.  The Seller

A Brand

A brand is a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.  A brand may identify one item, a family of items, or all items of that seller.

Branding is a promise of value to customers A brand is a logical extension of the product offering

A brand is a way of referring easily to the whole bundle of values and benefits that a customer sees as being offered by the product

Every organisation has a reputation. Buyers will form an opinion about your products and organisation, even if they have not done business with you yet. The challenge is to manage your reputation so that the opinion that people have of you is positive. This is what creates a good brand.

The Significance of Branding

Branding has been used from the earliest times to distinguish the products of one producer from those of another. A potter, for example, would put a cross or a thumbprint on his product to distinguish it from the products of others and the satisfied customer would seek out the products of that potter again while the dissatisfied customer would be able to recognise the unsatisfactory product by its brand and avoid it. No doubt, too, the branded products of one potter would come to command a premium over those products, branded or otherwise, of other potters. If one potter’s products were considered particularly satisfactory or aesthetically desirable, or were sought as status symbols despite being very similar to another potter’s products, then the branded products would come to be more valued than others and command particular loyalties and respect.

The Benefits of Brands

The brand represents, to the consumer, a credible guarantee of quality and satisfaction at a recognised price.

The use of such brands, therefore, provides the consumer with a kind of route map through what would otherwise be a bewildering range of alternatives. Conversely, though, brands can also provide the consumer with the ability to avoid a product if it has proved unsuitable in the past. For this reason brand owners must be sure to maintain quality, value and consistency in their brands.

Brands also offer a range of very real benefits to manufacturers. Firstly, they provide an opportunity for the producer to talk directly to consumers and to influence their likes and preferences. Through advertising and promotion, brands can be endowed with qualities and attributes that make them appealing and once consumers seek out and specify a branded product retailers are virtually bound to stock it.

Brands have a number of strategic functions, enabling the organisation to:

  • Differentiate yourself from your competition
  • Position your focused message in the hearts and minds of your target segments
  • Be consistent in your marketing efforts
  • Customise your services to reflect your brand
  • Deliver your message clearly and quickly
  • Project credibility
  • Create strong user loyalty

Brands are an important part of the value offer. They have become a significant element in marketing strategy development.  Branding is a human phenomenon as fundamental as the use of symbols. The 18th-century English artisan Josiah Wedgwood is often credited with building the first modern business brand.  Wedgwood was able to stimulate demand for his most profitable wares and commanded premium prices over comparable tableware and other products.

Brands have both functional and psychological elements.

Brands help buyers identify specific products that they do and do not like, which in turn facilitates the purchase of items that satisfy their needs and reduces the time required to purchase the product.  Without brands, product selection would be quite random because buyers could have no assurance that they were purchasing what they preferred.  A brand also helps buyers evaluate the quality of products, especially when they are unable to judge a product’s characteristics.  That is, a brand may symbolise a certain quality level to a purchaser and in turn the person lets that perception of quality represent the quality of the item.  A brand helps to reduce a buyer’s perceived risk of purchase.  In addition, a brand may offer a psychological reward that comes from owning a brand that symbolises status.  Certain brands of watches (Rolex) and cars (Mercedes-Benz), for example, fall into this category.

At a psychological level, a brand represents a promise to deliver a certain type of value to buyers.

Branding is a promise of value to customers

A brand is a logical extension of the product offering

A brand is a way of referring easily to the whole bundle of values and benefits that a customer sees as being offered by the product

“A promise of value for customers…. ensuring that the promise is kept through product development, production, selling, service and delivery — it helps attract and keep customers” (Ward 1999)

 `A multidimensional construct whereby managers augment products or services [offerings] with values and this facilitates the process by which consumer confidently recognise and appreciate these values’  De Chernatony and Dall’Olmo Riley (1999)

 Branding helps consumers psychologically bond with a product

Good brand creates consumer loyalty to product

Brands provide value to consumers by:

Simplifying decision-making through symbolism and reducing search costs

Reducing purchase risk

Providing a symbol of quality assurance

• Providing a promise of value

Identifying the source of the product offering and who takes responsibility for it

Legally protecting uniquely identifiable features;

Providing product offerings with unique associations

Justifying premium pricing through competitive advantage

For manufacturers, branding is a:

  • means of identification to simplify handling/tracing
  • means of legal protection
  • means of endowing offer with unique associations
  • source of competitive advantage
  • source of financial returns

For consumers branding:

  • identifies the  source of an offer
  • assignment of responsibility to an organisation
  • is risk reducer
  • is a search cost reducer
  • is a promise of value, bond, or pact with the organisation
  • is a symbolic device
  • is a signal of quality
Brands as an extension of the value offer

It is a well recognised concept that there is a value which attaches to a brand name.  A brand can and should be an enduring and profitable asset for its owners.

Brands exist in the minds of their potential consumers and that what those consumers perceive of a particular brand determines the value it has to its owner.  A brand’s foundations are, therefore, composed of peoples’ intangible mental associations about it.  In placing a value on a brand, we are placing a value on the strength and resilience of those associations.

A brand then is a complex thing. Not only is it the actual product, but it is also the unique property of a specific owner and has been developed over time so as to embrace a set of values and attributes (both tangible and intangible) which meaningfully and appropriately differentiate products which are otherwise very similar.


The term “Gestalt” has been used to help explain the complex nature of brands. It means literally “form” or “shape” and the concept behind the Gestalt is that nothing is simply the sum of its individual parts. Thus any attempt to analyse the whole by breaking it down into its molecular components is certain to fail. In psychology the term has been adopted to explain the process of perception: of how we understand and give form to the messages that we receive through our senses.

Psychologists have suggested that much of learning – of absorbing, ordering and understanding data – consists of forming Gestalt’s, of creating patterns of understanding such that fragmentary data can be formed into a fuller, richer whole. It has also been suggested that even the most simple Gestalt’s which we respond to and which we rely upon in making sense of complex reality, need to be established over an extended period of time.

A brand, then, acts as a Gestalt in that it is a concept which is more than the sum of its parts and which takes a long time to establish in the minds of consumers. Of course, in order to embrace a complex set of beliefs and values and internalise them as a Gestalt the recipient (or consumer) needs to recognise that what is on offer is appropriate and attractive. In other words, the Gestalt needs to be credible, coherent and attractive, supported and developed over time and not subject to rapid fluctuations in message, quality, positioning or overall “mood”.

Not all brands, of course, gain such authority and stature in the minds of consumers. They may have no particular features which set them apart from similar brands; or quality or positioning may vary so much that the consumer lacks confidence in the brand or fails to comprehend what the brand stands for. Alternatively, of course, the personality of the brand may be simply unattractive or unconvincing. To be successful, brands must be appealing and be maintained in good shape by their owners so as to continue to satisfy the consumer’s needs. A brand is therefore a “pact” between the owner and the consumer: it allows the consumer to shop with confidence in an increasingly complex world and it provides the owner with higher volumes, often higher margins and greater certainty as to future demand.

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